FinTech Boom: China Going Cashless, Consumers Ditching Banks
China is going cashless, consumers are moving away from traditional banking systems to more efficient and user-friendly financial technologies.
China, the largest fintech sector according to the International Trade Administration (ITA), is going cashless. Consumers are moving away from traditional banking systems to more efficient and user-friendly financial technologies.
KPMG, one of the Big Four auditors with over $25 bln in annual revenue, recently released its Fintech 100 list which represents the largest and most profitable companies within the global fintech market across all categories.
China’s Ant Financial and Qudian topped the list, claiming the first and second in rankings respectively. Lufax, ZhongAn and JD Finance also made it to the top 10 list, as Chinese companies accounted for 50 percent of the top 10 Fintech 100 companies.
Billions of Chinese users are ditching banking systems
As shown in various research initiatives such as KPMG’s Fintech 100 and ITA’s global fintech report, China is leading the international fintech sector. Billions of Chinese users are ditching restrictive and limited banking systems and moving towards non-banking services and fintech platforms.
In fact, according to Johan Nylander, a journalist at Asia Times, and Shenzhen Starbucks Cafe Manager Lily Li, the majority of people settle daily expenses and expenditures using their mobile phones. Rarely do people use cash or even credit cards, due to their inconvenience and high fees.
When purchasing simple items such as a cup of latte from Starbucks, Chinese consumers will simply tap their phone onto an NFC sensor and transact using their mobile fintech applications. China’s Alipay, developed by the country’s largest fintech company Ant Financial, is by far the most dominant service, which settles 58 percent of all online payments in China.
Fast growing FinTech sector
Mofei Chen, founder and CEO of Money Bazaar, stated in an interview that investors and users outside of China fail to understand the rapid development of the fintech sector in China. The fintech industry of China has advanced to the point where people don’t even remember the last time they used their wallets, Chen explained.
“I can hardly remember the last time I used my wallet. Few foreigners realize how fast and advanced the development actually is in new payment features and mobile financial services in China.”
Allen Yu, the operator of stock picking service MJL, also provided a similar statement to Chen, explaining that Chinese people hardly use their bank accounts. Even salaries come through Alipay, said Yu.
“I hardly use my regular bank account anymore. My salary comes in at Alipay and I make most payments with the app. They also offer better interest rates than the regular banks,” he noted.